In South Korea, the Virtual Currency Boom Hits Home

SEOUL, South Korea — Choi Whal-soo has been through the wringer of speculative bubbles.

After selling his real estate agency near Seoul, he invested in South Korean stocks and then watched them plummet in value after the Asian financial crisis of 1997. He tried to recover, continuing to play the stock market and lotteries, but lost yet more money.

Now, at 77 years old, he is hoping he can make it all back in the booming virtual currency markets, which have pushed the price of Bitcoin to new highs above $10,000 and pulled up the price of many alternative digital tokens.

Last week, Mr. Choi visited the physical location of one of South Korea’s many new virtual currency exchanges, with a plan to put about a quarter of his remaining $18,000 in savings into virtual currencies.

“I may have missed the Bitcoin boat but new boats are coming and I want to hop on those,” he said. “It is possible that some might be scams but even with those, the prices will rise at least in the middle of their life cycles so that there will be a chance to make money from trading them.”

Around the world, ordinary people, with no prior experience in virtual currencies, have been lured into the virtual currency markets in recent weeks by the soaring prices of Bitcoin and its competitors.

In Japan, small-time speculators have swarmed to Bitcoin since the government there essentially legalized the virtual currency earlier this year and gave licenses to several exchanges.

But nowhere has the public frenzy been more feverish than in South Korea. It was on South Korean exchanges that the price of Bitcoin first hit $10,000 last Monday, hours before traders in the United States reached the same level of exuberance.

And last week, trading between the Korean currency, the won, and Ether, the most valuable Bitcoin competitor, was nearly as active as trading between the dollar and Ether — despite the fact that Korea’s population is one-sixth that of the United States. With some virtual currencies, like Ripple and Bitcoin Cash, the won accounts for more trading than the dollar, according to the site CryptoCompare.

These volumes are all the more remarkable because just a year ago virtual currency markets barely existed in Korea, unlike in the United States and China, where virtual currency trading has grown over a number of years.

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Ra Saeyong, left, the owner of Bitcoin Center Korea, the Blockchain exchange office in Itaewon, watched a Bitcoin status chart on TV with a customer.CreditWoohae Cho for The New York Times

“This can lead to serious distortion or social pathological phenomena, if left unaddressed,” he said in a statement after a cabinet meeting.

Mr. Lee called on the Ministry of Justice and other agencies to take a closer look. South Korean regulators have already announced a ban on so-called initial coin offerings, in which entrepreneurs sell custom virtual currencies.

But the exchanges where existing virtual currencies are traded come under essentially no regulatory oversight in South Korea, unlike in the United States and Japan.

Mr. Lee said he was particularly worried about young people who have gotten caught up in the markets.

“There are cases in which young Koreans including students are jumping in to make quick money and virtual currencies are used in illegal activities like drug dealing or multilevel marketing for frauds,” he said.

Virtual currencies are not the first speculative markets to take off among ordinary investors in South Korea. The country has some of the most active foreign currency markets for small-time investors, allowing people to trade between the won, dollar, euro and smaller currencies.

Ha Tae-hyeong, a professor of economics at the University of Suwon, said that South Koreans have been drawn to speculative trading because of the lack of other high-yield investment options.

“People were looking for anything that would bring them higher return on investment,” Mr. Ha said.

Chung Gong-jin, a 16-year-old high school student, said he had been drawn to Bitcoin because it has gone up so quickly, and doesn’t require the same amount of knowledge as stock investing.

“I don’t feel like I have to study so much to invest in Bitcoin — about the market or the economy, for example — that I need to do to invest in stocks,” said Mr. Chung, who lives in a suburb of Seoul.

Mr. Chung is part of a 100-person group that meets to talk about investments and attend virtual currency conferences.

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A virtual currency exchange office in Seoul.CreditWoohae Cho for The New York Times

Even virtual currency enthusiasts in South Korea are concerned about the sudden rush into Bitcoin and Ether. They say investors are often getting in with little grasp of how virtual currencies work, like the decentralized network where all the transaction records are kept, or why they may be valuable over the long term.

“I do feel sorry to see so many people being shortsighted about Bitcoin, just trying to predict its price changes over short term to make quick money,” said Kim Joon-young, a 28-year-old who runs a popular virtual currency Facebook group, Plan B.

For now, the South Korean Bitcoin exchanges that have sprung up over the past year have done their best to stoke the excitement.

Unlike in the United States and Japan, where exchanges are entirely online, a number of South Korean operations have set up store fronts where investors can come to buy in and learn more.

Coinone, the second largest exchange in the country, opened a location in September in the financial district of Seoul, Yeouido, with an area for meetings, a help desk and virtual currency ATMs.

One day last week, around lunch time, a group of about 35 students from Konyang University were visiting the Coinone office for an introductory class on virtual currency investing.

Lee Jeong-min, a 39-year old social worker and author, was there to buy Ripple, a virtual currency that has been popular for cross-border bank transfers.

Ms. Lee said she saw some of her conservative friends, including teachers and pharmacists, getting rich on Bitcoin and she didn’t want to miss the next wave.

“I realized that I missed a bus, the Bitcoin bus, so that I can’t hop on that bus anymore,” she said. “But I can’t miss the next bus coming, can I?”

Ms. Lee said she spent around 300,000 won, or around $275, on 900 Ripple.

Mr. Choi, the 77-year-old former real estate agent, was also at Coinone, getting advice from the help desk on how to log in and invest from his home computer. He didn’t trust his cellphone with the transactions.

Like Ms. Lee, Mr. Choi felt it was too late to get in on Bitcoin. He is placing his big bet on the Ethereum network, and its Ether currency, which was designed to allow for a wider variety of transactions than Bitcoin.

He said he knows he might lose money, but he was holding out hope.

“I might die tomorrow. I am an old man,” he said. “But I think that hope keeps people going. Without dreams, there is nothing for a man. Hoping that things would get at least a little better is important.”

Su-hyun Lee reported from Seoul, South Korea and Nathaniel Popper reported in San Francisco. Makiko Inoue contributed reporting in Tokyo.

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Koreans Rush In On Bitcoin And Rivals. Order Reprints | Today’s Paper | Subscribe